Executive Order Signals Administration’s Goals of Dodd-Frank Reform

On Friday, February 3rd, President Trump signed an executive order on "Core Principles for Regulating the United States Financial System." The order follows comments by Trump indicating his intentions to significantly reform the Dodd-Frank act, according to a recent article in the Wall Street Journal. In his remarks President Trump explained that his greatest concern with the law is its impact on financial institutions' ability to lend to businesses.

However, despite the plans for reform that the President touched on, the order represents only a preliminary step towards revising the post-crisis law. Effectively, the order directs the Treasury Secretary to work with FSOC member agencies to develop a report within 120 days on potential reforms to promote the outlined priorities. Steven Mnuchin awaits confirmation as Treasury Secretary by the full Senate, with a floor vote on his nomination expected within a week.

Among the "core principles" outlined in the order, several are potentially linked to the structured finance industry. Of note, is the goal of "more rigorous regulatory impact analysis that addresses systemic risk and market failures." This may indicate increased use of cost based analysis for weighing the value of regulations, which is also an idea vigorously promoted by House Speaker Paul Ryan in his "A Better Way" proposal. Another is the stated goal to "restore public accountability", likely an indication of action to come on reining in the authority of the CFPB.

SFIG is prioritizing advocacy efforts related to Dodd-Frank and other key policy initiatives. We will continue to work with Congress and the Administration to develop policy solutions which recognize the importance of the structured finance industry and its role as a key source of funding for the real economy.

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